Lorang v. Ditech Financial LLC

This
lawsuit arises from a long-running dispute involving a home
owned by plaintiffs, James and Marcia Lorang. The Lorangs
defaulted on their home loan, and the owner of the loan, Bank
of America, initiated foreclosure proceedings in state court.
At some point, the loan was transferred to Ditech Financial
LLC, the defendant here. The state-court foreclosure action
has nearly run its course, with Ditech securing a judgment of
foreclosure against the Lorangs.

The
parties have filed cross-motions for summary judgment. Dkt.
15 and Dkt. 37.[1] The Lorangs have adduced evidence
sufficient to raise a genuine dispute of material fact as to
one claim under the FDCPA, so that claim will have to be
resolved at trial. But the Lorangs have otherwise failed to
adduce evidence to support their claims, and so the court
will grant summary judgment in favor of Ditech on all the
other claims.

UNDISPUTED
FACTS

Except
where noted, the following facts are undisputed.

In
2004, the Lorangs got a loan to buy a house in Fort Atkinson,
Wisconsin, and secured the loan with a mortgage. Eventually
Bank of America acquired the loan. In 2009, the Lorangs
defaulted on the loan, and in December 2012, Bank of America
initiated state-court foreclosure proceedings. Soon after,
Bank of America assigned the note and mortgage to Ditech. The
ins and outs of the protracted state-court litigation are
complicated and, for the most part, not relevant here. It
suffices to say that Ditech secured a judgment of foreclosure
against the Lorangs in May 2016, shortly before the Lorangs
filed suit here, on June 16, 2016. (In November 2016, the
Lorangs asked this court for a preliminary injunction barring
confirmation of the sheriff's sale of their home. Dkt.
19. The court denied that motion. Dkt. 28.)

The
main issues in this case involve the communication between
Ditech and the Lorangs during the state-court foreclosure
action. As the state-court litigation ran its course, Ditech
evaluated the Lorangs' “loss mitigation”
options, which is to say, the ways in which the Lorangs'
loan or payments might be modified to avoid foreclosure. The
parties dispute whether the Lorangs submitted a complete loss
mitigation application. The Lorangs rely on James's
declaration testimony: “We applied for the modification
and provided all required documentation for that application,
sending everything the application requested.” Dkt. 17,
¶ 4. Ditech relies on its business records to show
otherwise. Dkt. 33, ¶ 8. The parties agree that on
November 4, 2015, Ditech sent the Lorangs a letter that said
their application was incomplete and asked that specified
documents be provided by December 4, 2015. Dkt. 1-1.

The
parties' communication was complicated by the fact that
the Lorangs' counsel changed firms during the course of
the case. Ditech sent the November 4 letter to Marcia Lorang,
in care of Krekeler Strother, the Lorangs' counsel's
former law firm. By November 2015, the Lorangs' counsel,
Briane F. Pagel, had moved from Krekeler Strother to Kerkman
& Dunn. (In January 2017, Pagel moved again to Lawton
& Cates.) So Ditech sent the letter to the wrong address.
But Krekeler Strother forwarded the letter to Pagel, and all
agree that Pagel received the letter in time to respond. On
December 2, 2015, Pagel forwarded the additional documents to
Ditech's outside counsel. Ditech's counsel responded,
“Thank you. We will forward this information to our
client for review.” Dkt. 1-2.

Ditech
contends that, despite the additional documents, the
Lorangs' application remained incomplete. On December 11,
Ditech sent a second letter to the Lorangs (again addressed
to Marcia Lorang, in care of Krekeler Strother, but this
letter, too, was promptly forwarded). The letter said that
Ditech had not received a complete loss mitigation
application within the specified timeframe. As a result,
Ditech would not review the application. Dkt. 1-3.

The
Lorangs had other loss mitigation options. On December 12,
Ditech sent the Lorangs a letter informing them that they had
options to “avoid foreclosure.” Dkt. 33-2, at 1.
Ditech had approved the Lorangs for a “Trial Period
Plan to modify [their] mortgage payment.” Id.
If the Lorangs were able to follow the Trial Period
Plan's terms, Ditech would permanently modify their
mortgage. Id. Once again, Ditech sent the letter in
care of Krekeler Strother. But the Lorangs contend that they
did not receive this one. Dkt. 17, ¶ 19 (“Neither
I [James Lorang] nor my wife ever received . . . a proposed
trial modification packet from Ditech.”). The Lorangs
did not make any trial payments, and Ditech denied the
Lorangs a permanent modification based on the Trial Period
Plan.

On
December 28, Pagel emailed Ditech's counsel and asked him
(1) to make sure that Ditech had Pagel's current contact
information, as he had left Krekeler Strother but that firm
had received the November 4 letter; and (2) to confirm when
Ditech had received the Lorangs' supplemental documents
(sent via email on December 2) and that the Lorangs had
timely submitted those documents. Dkt. 1-4. Pagel
acknowledged that the Lorangs had received the December 11
letter declining to review their application. Ditech did not
respond to the December 28 email.

On
January 20, 2016, James Lorang sent Ditech a letter
requesting “a payoff amount in writing as of February
15, 2016.” Dkt. 1-5, at 1. James also requested that
Ditech explain how it calculated the payoff amount.
Id. The parties dispute whether Ditech responded to
the letter. According to James, Ditech did not respond. Dkt.
17, ¶ 17. But Ditech says it did, on January 28, 2017.
Dkt. 33, ¶ 12 and Dkt. 33-4 (noting payoff amount is
$376, 935.56 and providing a breakdown of that number).
Ditech sent the letter to Marcia Lorang, in care of Kerkman
& Dunn. Dkt. 33-4, at 1. (Although by this time Pagel had
moved again to Lawton & Cates, there is nothing in the
record to show that Ditech had Pagel's newest contact
information.)

Ditech
maintains a designated address for receiving, reviewing, and
responding to qualified written requests for information.
That address is P.O. Box 6176, Rapid City, South Dakota
57709-6176. The Lorangs concede that Ditech provided written
notice of this address to them on various correspondences.
Dkt. 45, ¶¶ 15-16.

The
court has subject matter jurisdiction over the Lorangs'
RESPA and FDCPA claims pursuant to 28 U.S.C. § 1331,
because they arise under federal law. The court may exercise
supplemental jurisdiction over the Lorangs' state-law
claims pursuant to 28 U.S.C. § 1367.

ANALYSIS

Summary
judgment is appropriate if the moving party “shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). “Only disputes over facts that
might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). When the parties have filed cross-motions for summary
judgment, the court “look[s] to the burden of proof
that each party would bear on an issue of trial; [and] then
require[s] that party to go beyond the pleadings and
affirmatively to establish a genuine issue of material
fact.” Santaella v. Metro. Life Ins. Co., 123
F.3d 456, 461 (7th Cir. 1997). If either party “fails
to make a showing sufficient to establish the existence of an
element essential to that party's case, and on which that
party will bear the burden at trial, ” summary judgment
against that party is appropriate. Mid Am. Title Co. v.
Kirk, 59 F.3d 719, 721 (7th Cir. 1995) (quoting
Tatalovich v. City of Superior, 904 F.2d 1135, 1139
(7th Cir. 1990)). “As with any summary judgment motion,
this [c]ourt reviews these cross-motions ‘construing
all facts, and drawing all reasonable inferences from those
facts, in favor of . . . the non-moving party.'”
Wis. Cent., Ltd. v. Shannon, 539 F.3d 751, 756 (7th
Cir. 2008) (quoting Auto. Mechs. Local 701 Welfare &
Pension Funds v. Vanguard Car Rental USA, Inc., 502 F.3d
740, 748 (7th Cir. 2007)).

“[S]ummary
judgment ‘is the “put up or shut up” moment
in a lawsuit, when a party must show what evidence it has
that would convince a trier of fact to accept its version of
events.'” Johnson v. Cambridge Indus.,
Inc., 325 F.3d 892, 901 (7th Cir. 2003) (quoting
Schacht v. Wis. Dep't of Corr., 175 F.3d 497,
504 (7th Cir. 1999)). A mere “scintilla of
evidence” is not enough to survive. Pugh v. City of
Attica, 259 F.3d 619, 625 (7th Cir. 2001).

If any servicer of a federally related mortgage loan receives
a qualified written request from the borrower (or an agent of
the borrower) for information relating to the servicing of
such loan, the servicer shall provide a written response
acknowledging receipt of the correspondence within 5 days
(excluding legal public holidays, Saturdays, and Sundays)
unless the action requested is taken within such period.

§ 2605(e)(1)(A). A “qualified written
request”-or QWR-is any “written correspondence,
other than notice on a payment coupon or other payment medium
supplied by the servicer, that . . . includes, or otherwise
enables the servicer to identify, the name and account of the
borrower; and . . . includes a statement of the reasons for
the belief of the borrower, to the extent applicable, that
the account is in error or provides sufficient detail to the
servicer regarding other information sought by the
borrower.” § 2605(e)(1)(B).

Here,
the Lorangs contend that Ditech did not respond to two QWRs:
Pagel's December 28, 2015 email, and James Lorang's
January 20, 2016 letter. The Lorangs further contend that
Ditech did not reasonably evaluate their loss mitigation
application, in violation of RESPA regulations, 12 C.F.R.
§ 1024.41.[2]

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